‘A One-Two Punch For Homeowners’: Pete Ricketts Points To Inflation Driving Up Home Insurance Costs

Forbes Breaking News

During Wednesday’s Senate Banking Committee hearing, Sen. Pete Ricketts (R-NE) spoke about rising homeowners insurance costs.

Transcript

00:00for being here today. The four years the Biden administration we saw reckless

00:05spending trillions of dollars on partisan programs that drove up

00:09inflation. Average home or average family in America had to pay $13,000 more

00:16to have the same standard of living after Biden as they did before Biden and

00:22so Mr. Gordon I think you reflected that in your testimony that inflation was the

00:27primary driver of that. We've seen in Nebraska when we're talking about these

00:33homeowner insurance rates that the average home insurance premium has gone

00:37as high as now at up to $5,121 for a home valued at $300,000.

00:44The average home insurance annual premium rate in the U.S. last year was $2,100,

00:50$5,100 or $51. So that's a difference of $2,970 that

00:57Nebraska pays higher in insurance premiums than the average in the rest of the

01:02country. That's a one-two punch for homeowners who have just experienced four

01:06years of high inflation where we've seen all these costs for everything from

01:09groceries to gasoline go up then to have to pay that as well. Now one of the

01:16things that we have in Nebraska is we do have weather. We've had since I was a kid.

01:20We had a 1975, we had a tornado that came through Omaha. We had another tornado came

01:25through last year so about once every 50 years or so we've experienced that in

01:30Omaha. But you know in Fremont actually four out of the last five years they've

01:34had hail. Just recently they had four inch hail. Now unless we're talking about

01:39micro climate change Fremont's community it's 45 minutes from Omaha yet that hail

01:45didn't really impact any other communities it was just bad luck that

01:48Fremont got hit with that. So I think it's hard to say that climate change is gonna be the

01:52primary driver of that. But Mr. Gordon I wonder if you know you can comment on do

01:58you have some thoughts on specifically Nebraska why we've seen these homeowner

02:03insurance rates go up. Have you got any specific data with regard to Nebraska?

02:08So we do have specific data on Nebraska the NAIC just released and we'll provide

02:14that to your office. I will just say Nebraska is a great place to live and one of

02:19the trends. We have the best place in the world. One of the trends we've seen

02:23accelerating after the pandemic is people moving to states and building nicer more

02:29expensive homes and then you add 40 year record inflation and then you add on top

02:35of that even higher inflation in the building materials and supplies and then

02:40you add a little bit from climate change and legal system abuse and so forth and

02:44we've gotten about an eight percent annual increase in the cost from severe

02:48convective storms like hail and tornadoes that are hitting Nebraska. So the

02:52weather accounts for about eight percent of that overall is that what you're

02:55saying? So the increasing losses are about eight percent. The climate change is

02:59only about one percent of that eight percent. The rest is the 40 year record

03:03inflation and even higher inflation in the building materials and supplies. Mr.

03:07Epstein do you have any data specifically about Nebraska and why we're

03:10seeing these big insurance premium costs? Well I think the most important data that

03:15hasn't been covered yet is just this because we've heard repeatedly this claim

03:18that you know it's climate change extreme weather that's driving all these

03:21local insurance premium increases but if you look at we have macro data for

03:25measuring this kind of thing things like accumulated cyclone and energy

03:29hurricane frequency hurricane intensity and what we see is we don't see any

03:33significant changes in there we do see some warming but we're not seeing any

03:36significant changes the hypothetical changes are in the future we also see a

03:40adjusted for GDP globally damages are not going up so if we have an insurance

03:44premium thing it's not going to be driven by climate it's driven by other

03:47things including lack of resilience and or subsidizing people to take on way too

03:52much risk and it's really simple just we need to stop through all these

03:56disaster relief things we need to stop subsidizing people for taking risks and

04:00make others do it that's just leading to all these cascading problems there's no

04:03way around that. So Mr. Epstein if I understand what you're saying one of the things

04:07you're saying is hey if you look over the at least as long as we've got data which is

04:10probably like the last hundred years we've probably got really good data and

04:14you look at the occurrences like things like tornadoes in Nebraska or

04:16hurricanes in the Gulf they aren't occurring any more or less than they were.

04:20Yeah there's just not statistically significant trends there's there's

04:23projections about the future of like storms will become 10% more intense and

04:27less frequent which that itself is not very dramatic it's just you can have

04:30mild change that's just not that discernible it's just not that big a factor and we have to be real about that it's real it's just small.

04:37And we don't even know if it's net negative in terms of these extreme weather issues.

04:40And so one of the things that you also comment on I'm actually running out of time

04:45though is the insurance environment I just want to highlight in Nebraska we

04:49actually have a great insurance department we don't have some of the

04:52problems that you describe Mr. Epstein with California with regard to that and

04:55they really do a wonderful job in fact Nebraska is one of the leaders in the

04:59insurance marketplace we have many countries companies that are domiciled in

05:02Nebraska because of our great insurance marketplace and great

05:05environment we have in the state. So I just wanted to give a shout out to my home

05:10state industry here. Thank you very much Mr. Chairman. Thank you. Senator Cortez Vasto.

Category

Transcript

Recommended